After the plunge, China has launched new stimulus measures created to boost the country’s flagging economy.
Many experts have suggested this is a good time for the U.S Economy, and everything should stabilize over a few months, but warn it could take up to a year.
The POBC lowered its benchmark lending and deposit rates by 0.25 percentage point, adding the rate cuts will become effective on 26 August and are aimed at reducing corporate borrowing costs.
The slump had resumed last week despite ‘s efforts to arrest a 30 percent crash earlier in the summer with hundreds of billions of dollars of state-backed share purchases.
“In addition to the Chinese slowdown, the worldwide downturn is also being attributed to the fall in global commodity prices, uncertainty over when US Federal Reserve might raise interest rates and the Greek economic collapse”. The DAX index of German stocks, which was already up for the day, shot back above 10,000 and is now up 4.37%. This, of course, followed what was quickly and oh-so-glibly called “Black Monday”, though this morning’s pre-market +600 points on the Dow may put a damper on such rhetoric.
Tuesday’s rate cut was the fifth since November last year, when the latest easing cycle began after the PBoC slashed the lending rate for the first time in more than two years. “The litmus test will come overnight, however, and the efficacy of the… cut in boosting the domestic stock market“. There have been no signs of large-scale purchases by the China Securities Finance Corp. during the past week.
‘The weakness in emerging markets is now spreading to developed market outlook, questioning the scope of potential base rate liftoff over the coming months in the U.S. and the UK, ‘ analysts at RBC Capital wrote in a note.
“… such a big trend will not be swayed by some unusual short-term jitters in the stock markets or exchange markets”, the editorial said.
To keep China’s economy growing at around 7 percent, as targeted by the government, economists widely expect China’s central bank to lower the RRR by at least another 50 basis points this year.
“The Chinese economy is going to be on this bumpy road for a while and it will have ebbs and flows that will no doubt have a serious impact on the global economy”, he says.
“The current panic is essentially ‘made in ‘”.
Minutes of BOE officials’ recent deliberations show the United Kingdom central bank’s Monetary Policy Committee paying considerable attention to the global outlook when setting policy.
Some companies, too, have sought to reassure investors that ‘s economy is not about to go over the cliff, with Apple Inc CEO Tim Cook and planemaker Boeing Co. making encouraging noises about on Tuesday.